HomeMy WebLinkAboutCDC Union Bank Background (Finance)Background
In 2005, the Community Development Commission (CDC) entered into a Banking Agreement
between the CDC and Wells Fargo Bank. The CDC has been satisfied with the service from
Wells Fargo Bank during its 6 year relationship. However, the banking industry and related
technologies have changed since 2005, and the apparent need to provide efficiencies and cost
savings in today's economic climate made it necessary to issue a request for proposals (RFP) for
banking and custody services.
With the merger of the CDC with the City of National City, it was also necessary to bring both
organizations under the same banking relationship. Having two different banking relationships
created repetitive, duplicative demands on staff in areas such as bank reconciliations, repayments
between the CDC and the City and more importantly, increased banking fees. Consolidation of
banking services would promote more effective and efficient banking services.
On September 9, 2010, the City and CDC opened a RFP for banking and custody services and
accepted proposals through October 4, 2010. A four -member committee, which consisted of the
City Treasurer, the Assistant City Manager, the Director of Finance and the Financial Services
Officer, reviewed the proposals and interviewed and ranked the financial institutions.
The minimum qualifications for the financial institutions to meet were:
• Be a federally or State of California chartered financial institution.
• Be a member of the Federal Reserve System and have access to all services.
• Be a qualified depository for public funds.
• Be a full service bank in good standing among other comparable banks.
• Be capable of providing the services sought by the City and the CDC.
• Have an established office within the City limits
• Agree to assign experienced and dedicated staff who is committed and capable of servicing
our accounts.
• Be in compliance and good standing with the Community Reinvestment Act.
• Be sufficiently capitalized to accommodate our cash/investment management needs.
The CDC and the City received three proposals from the following banks: Bank of America,
Union Bank and Wells Fargo Bank. The committee interviewed all banks and evaluated each
using the following criteria:
• Financial Strength of the bank and the ability of the bank to protect and collateralize
City/CDC deposits
• Cost to the City/CDC and ability to guarantee pricing for the contract period
• Quality of references and overall experience with public agencies
• Qualifications and strength of the relationship management team
• Ability to offer product and service enhancements and
• Location of bank offices
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Union Bank was ranked first overall by the committee. The pricing proposed in the RFP was
significantly lower than the other banks. Union Bank committed guaranteed fixed pricing for
five years and provides a $3,000 allowance to offset the cost of implementation. The
management team is committed to quarterly customer service visits and is readily available in
downtown San Diego. The bank also provided suggestions and specific services for
improvement in areas of the City's cash management practices (remote deposit check processing
and payee positive pay).
The current annual analysis charge for the CDC is approximately $20,000. The CDC does not
utilize the credit card processing very often and therefore the credit card fees are minimal.
It is estimated that the conversion of banking services would be approximately 6-8 weeks and
will include the following phases: establish an implementation team, documentation preparation,
technical implantation and training. Union Bank staff will be on site working with
implementation members and City staff will receive webinar or telephone training. Attached is
Union Bank's conversion plan to transfer banking services.
Recommendation:
Approve the agreement with Union Bank and authorize the Executive Director to execute other
related documents as deemed necessary.
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